GlaxoSmithKline Q3 profits fall but EPS up - UPDATE
Drug giant Glaxosmithkline (GSK) announced lower third quarter sales and profits as weak trading in the US and Europe overshadowed a strong performance in emerging markets, although earnings per share rose excluding divestments.
GSK said third quarter turnover fell 3% at constant exchange rates and 10% in total to £5.6bn and core operating profit dropped 1% and 6% in total to £1.9bn.
Core earnings per share lifted 5% at constant exchange rates to 27.9p in the third quarter, but were down 2% to 68p in the nine months.
Pharmaceutical and vaccine sales fell 3% but emerging markets rose 12% and Japan was up 6%, offset by a 10% fall in the US and a 2% decline in Europe.
Respiratory was down 8% reflecting significant changes to pricing and volumes for Advair in the US.
Third quarter consumer health sales fell 3%.The group said a recovery from supply interruptions was on track with full year sales expected to be broadly flat subject to continued progress of a supply recovery plan.
It declared a third interim dividend of 19p per share, unchanged from a year ago. The full-year dividend is expected to be 80p per share and the 2015 dividend is expected to stay at the same level as 2014.
The company also said it was launching a restructuring programme to re-focus its global pharmaceutical business and save £1bn in costs following its divestment of oncology products and changes in the US market for respiratory products.
GSK is also considering selling a minority stake in its HIV drugs business ViiV Healthcare through an initial public offering "to improve future strategic flexibility and visibility within the group."
Management may have bought itself some time, CMC's Hewson says
Michael Hewson at CMC Markets said: "Have we reached the bottom for Glaxo’s shares? With the shares at 18-month lows CEO Andrew Witty has had a turbulent few months but it does appear that management are seeking to get a handle on things with respect to overhauling the business from top to bottom in the wake of its problems in China.
"As one of the more stable FTSE100 dividend payers, the decline in the share price has been rather painful for some of the shareholders.
"By maintaining its dividend and seeking to cut costs and offload its stake in its HIV business, management may well have bought themselves some time in seeking to turn sentiment in the business around."